EXPORTING MADE EASY
The Incoterm CIF stands for “Cost, Insurance, and Freight.”
Under CIF, the seller is responsible for the cost of the goods, transportation to the destination port, and insurance coverage for the goods during transit.
The key points are:
1.Cost: The seller covers the cost of the goods and their transportation to the destination port.
2.Insurance: The seller is responsible for arranging and paying for insurance to cover the risk of loss or damage to the goods while they are in transit.
3.Freight: The seller pays the freight charges to transport the goods to the destination port.
Significance of CIF:
1.Comprehensive Responsibility: CIF provides a comprehensive package where the seller handles most of the major expenses associated with shipping, including insurance. This can simplify the buying process for the buyer, as they only need to handle import duties and other local costs upon arrival.
2.Risk Management: Since the seller provides insurance, the buyer is somewhat protected against the risk of loss or damage during transit. However, the risk of loss or damage still transfers to the buyer once the goods are loaded onto the vessel.
3.Clear Allocation of Costs: CIF clearly allocates costs and responsibilities, helping to avoid misunderstandings. The seller manages the logistics and insurance, while the buyer only needs to focus on handling costs related to unloading and importation. 4.Market Competitiveness: CIF terms can be attractive in competitive markets where buyers may prefer to have the seller handle more of the shipping logistics and insurance.
Overall, CIF helps streamline international trade by specifying who is responsible for various costs and risks, thus facilitating smoother transactions and reducing potential disputes.